Problem 10-23 Effect of product versus period costs on financial statements LO 10-2, 10-3 Sinclair Manufacturing Company experienced the following accounting events during its first year of operation. With the exception of the adjusting entries for depreciation, assume that all transactions are cash transactions and that financial statement data are prepared in accordance with GAAP. 1. Acquired $68,000 cash by issuing common stock 2. Paid $8,700 for the materials used to make its products, all of which were started and completed during the year. 3. Paid salaries of $4,500 to selling and administrative employees. 4. Paid wages of $10,000 to production workers. 5. Paid $9,800 for furniture used in selling and administrative offices. The furniture was acquired on January 1. It had a $1.600 estimated salvage value and a four-year useful life. 6. Paid $16,000 for manufacturing equipment. The equipment was acquired on January 1. It had a $1,000 estimated salvage value and a five-year useful life. 7. Sold Inventory to customers for $35,000 that had cost $14,000 to make Required Indicate how these events would affect the balance sheet and income statement by recording them in a horizontal financial statements model as indicated here. The first event is recorded as an example (Enter any decreases to account balances with a minus sion in the Cash Flowcolumn indicate whether the item is an oneratinn artivity IA Investinn netivity Al financing activity (FA), or leave the cell blank if there is no effect.) Assets Manuf. + Inventory + + inventory Equip Income Statement Rev. - Exp. - Net Inc. Financial Statements Model Equity Office Common Furn S tock 68,000 + Event 1 Cash Cash 68,000 Cash flow Ret. Ear. 68,000FA It 1 NNNNN D 0- D 0 lol 68,000 Tota 68,000 09- 68000